Utility distribution operators and outage crews put in a tremendous effort to repair damages and restore power. In the aftermath, utilities are doubling down on grid resiliency to be better prepared for next time. Smart utilities are investing in looped power lines peppered with intelligent devices in an effort to reduce the outage impact of downed power lines and other faults. By “looped and intelligent,” I mean power systems that have automated redundancy, enabling faster restoration. System Average Interruption Frequency Index (SAIFI) is the IEEE metric for the number of sustained interruptions per customer over a year. The distinction between a shorter and a sustained outage varies from state to state but is most often 5 minutes, meaning a sustained outage is greater than 5 minutes.

When dual- or multi-sourced lines with grid automation devices are in place, there will be significant reductions in affected customers during storms that cause heavier damage over a small area (for example one faulted substation in looped circuits), or moderate to extensive damage over a large area (for example a half a dozen randomly distributed faulted lines per dozens of substations, i.e., enough transformer capacity to reconfigure sourcing to some or all un-faulted sections).

“Self-healing teams, by means of two-way communication to fault-interrupting and switching devices, can locate a faulted section of line, isolate that section of line, and restore power from another source,” says Schneider.

Self-Healing Helps Many

He also describes how the investment in self-healing is creating returns for Duke customers in Ohio. “In our currently active Ohio Grid Modernization project we have installed 24 self-healing teams over the past 4 years. From these self-healing teams we have experienced 20 operations that have resulted in 30,000 customers that have avoided a sustained outage,” says Schneider.

Based on EPRI research, it’s reasonably conservative to assume that an avoided outage is worth $2.50 to residential customers and $250 to small commercial customers. With a typical 90:10 ratio between these two customer classes that comes out to an average value of $25 per outage. Using this conservative assumption, it’s fair to say that self-healing in the currently active deployment has likely created $750,000 in satisfaction value to Duke Ohio customers.

While self-healing systems can do little when power systems are faulted at the majority of sources within a service territory, it’s interesting to look into cases such as in Connecticut, where 90% of outages were reportedly line faults caused by trees. Assuming most of the substations were still standing, and if all lines were modernized, the utility could quickly restore 20%(severe) to 60% (moderate) of all affected customers. This means that 132,000 to 396,000 customers would have lights back within seconds or minutes, representing a value of $3.3 to $9.9 million for a single storm.

The performance of some reliability programs can be tracked, and improvements in SAIFI indicates that a deployment is successful. “Prior to the start of our program, our 2008 annual average Ohio SAIFI number was 1.33. Our 2012 annual average Ohio SAIFI number is expected to be 1.03,” says Schneider. He points out that the Grid Modernization program consists of other substation device automation and critical line device automation that also contributes to improved SAIFI.

Introduced to the world at the end of 2010, the Nissan LEAF had its first full year of production in 2012. It’s fair to say that sales have fallen well short of expectations. CEO Carlos Ghosn’s stated goal of 10% of global light vehicle sales being pure electric by 2020 has long been ignored by other OEMs.

That’s not to say the LEAF has been a failure. U.S. sales of 9,819 in 2012 are respectable for a small sedan with a list price greater than $30,000. However, the Chevrolet Volt sold 23,461 vehicles in 2012, although it’s classified as a plug-in hybrid rather than an electric vehicle. The other volume player in this niche market is the Toyota Prius Plug-in, which didn’t reach the U.S. market until the summer of 2012. By November the Prius was selling slightly more than either of its competitors.

Nissan has cut the list price of its entry-level LEAF to $28,800, which represents a drop of 18% over the previous model. The company expects that to increase sales by about 20% in 2013. With the federal tax credit of $7,500 still available and the benefit of additional local incentives, this will bring the purchase cost below $20,000 in many states, which should attract new customers. The cost reduction was made possible by manufacturing in the Nissan plant in Tennessee rather than importing complete vehicles from Japan.

A Long Way from 10%

A 20% boost in sales year-on-year seems on target. The reality is that EVs are still very much a niche market and appeal to a small number of consumers. Surveys indicate growing interest in electric drive technology, but expressing interest in a poll is very different from writing a check. The underlying meaning from many poll results is that people would be very interested in electric vehicles if they cost about the same and had a similar range to conventional vehicles.

Unfortunately the EV of today misses both those goals by a considerable margin. Although the Chevrolet Volt has sold well for a $40,000 vehicle, the conventionally-powered Cruze, which shares the same platform, starts at $17,000 and sold about 10 times as many in 2012. Although the hybrid drivetrain has now become simply another option on the new car list, the plug-in hybrid and pure electric vehicle remain more of interest to those interested in the technology, or in other incentives such as HOV lane access or free parking.

Range remains an issue for many people, despite many studies showing that a range of about 70 miles is plenty for most drivers on most days. Buyers need to know that their vehicle can also handle weekend trips of a few hundred miles each way, as well as the daily commute. Not all can justify ownership of multiple vehicles. The increasing availability of recharging infrastructure is helping the situation in some cities, but there remains a great deal to do in educating the car-buying public about the new paradigm of plugging in each night rather than filling up at a gas station.

It’s worth noting that the overall sales for Nissan North America in 2012 were about 1.14 million, so LEAF sales represent less than 1% of Nissan’s total last year. A 20% boost will hit 1%, but that’s still a long way from 10%.

Net metering essentially allows homeowners and commercial entities to barter electricity with their host distribution utilities. At night, when virtually all of us are drawing power from the utility grid, your meter spins forward, adding to your monthly utility bill. When the sun is shining and the solar panel on your rooftop generates electricity, with net metering, it actually spins backwards, removing demand for power from the grid.

Utilities complain that this policy is unfair to customers who do not generate their own power. In California, the nation’s most successful solar market, the state’s three investor-owned utilities – Pacific Gas and Electric (PG&E), Southern California Edison (SCE), and San Diego Gas and Electric (SDG&E) – have calculated that the amount of solar photovoltaic (PV) coming online by the end of 2015 will add up to approximately $1.3 billion in increased electricity costs for ratepayers who lack solar. In the utilities’ view, net metering customers are not being charged a fee to help maintain the grid that serves everyone.

Proponents of solar energy see net metering as a phenomenal success story. According to a report developed by Crossborder Energy consultants and released earlier this month, net metering actually provides more than $92 million in benefits to ratepayers of PG&E, SCE, and SDG&E. Interestingly enough, this new report claims that the majority of the benefits of solar PV flow to customers that do not have solar on their rooftops – since they reap the benefits of reduced demand on utility grids, lowering overall system costs. Only PG&E residents incur greater costs than benefits, according to the Crossborder Energy study.

Net Metering (NEM) Costs (Red) & Benefits (Green) per CA Utility

(Source: Crossborder Energy)

Bringing this issue to a boil is a California state law that places a cap on net metering. Thanks to a ruling by the California Public Utilities Commission (CPUC), the cap is now higher than originally thought: 5,700 megawatts (MW) of solar PV. But the CPUC ruling would also end the net metering program as of January 1, 2015. The amount of net-metered solar PV feeding into California’s grid is currently just under 2,000 MW, and PG&E expects that the number of solar PV customers using net metering within its service territory will reach its cap this year ­ mobilizing solar advocates to increase the cap even higher.

To put this issue in context, consider the fact that California’s fiscal incentives for consumers to install solar PV are dwindling to near zero under the so-called California Solar Initiative (CSI) program. Solar PV costs are declining to near the utilities’ retail price for electricity, but in order for consumers to fully maximize the value of their solar systems, net metering is now more important than ever before.

The solar industry is not fully united on the topic of net metering. Some, such as Craig Lewis, executive director of the CLEAN coalition, claim there is a better way. He likes the feed-in tariff (FIT) model that has flourished in some European countries, such as Germany. The FIT pays consumers for the power they generate as it flows onto the wholesale power grid, just like any other power source. “I think both the utilities and net metering advocates are right,” Lewis told me recently, acknowledging that calculating the cost shifts and benefits associated with net metering is incredibly complicated. “If taken to the extreme, net metering could lead to a downward death spiral for utilities,” he warned.

Here’s the kicker: California utilities are allowed to charge ratepayers up to $0.28 per kilowatt-hour (kWh) for solar PV systems they own and build, while new projects developed under the FIT model by non-utilities are charging as low as $0.12/kWh.

The Virginia proposal calls for eliminating the gas tax, which is currently $0.175 per gallon (it hasn’t been raised since 1987 and is one of the lowest in the country); increasing the sales tax instead to fund transportation; and increasing vehicle registration fees, including charging AFV drivers an additional $100 per year, with the revenue going to transit funding.

One problem with this plan is that it decouples transportation infrastructure funding from actual road use, instead making everyone pay for roads, whether they use them or not. This is not inherently a terrible idea, as this is already the case for other types of taxpayer funded programs, like schools. However, all taxes have perverse effects of some kind, and, as other critics of the plan have noted, higher gas taxes tend to result in behavior that helps the environment and reduces highway congestion. Sales taxes are also regressive, meaning they hit poorer taxpayers proportionately harder, while gas taxes are progressive: you drive more, you pay more. Shifting the tax to all retail spending takes away the benefits of the gas tax, and would encourage greater fuel consumption.

Alt Fuels Discouraged

The worst part of Governor McDonnell’s plan is to single out AFV owners by charging them a $100 fee. It seems like an idea borrowed from other states that are trying to make up the funding deficit from falling gas tax collections, like Washington state, which recently passed an EV fee of $100. This tariff is meant to rectify the fact that EV drivers are not helping pay for roads through the gas tax. I cannot see any good reason for taking away the gas tax that drivers of conventional cars pay, and then adding a fee that punishes EVs and other alternative fuel cars.

Another component of the proposal that seems counterproductive: maintaining the diesel fuel tax. Presumably that is meant to ensure that the state still collects revenue from truck drivers using Virginia roads. But it will also make Virginia a terrible market for another type of fuel-efficient vehicle – diesel cars. As I discussed in my Clean Diesel Vehicles report last year, the slightly higher price for diesel than for gas in the United States already discourages adoption of diesel cars. If the $0.175 state tax on gasoline disappears while diesel still gets taxed, this difference almost entirely wipes out the fuel savings that diesel drivers get from better fuel economy. While only 125,500 light duty diesel cars sold in the United States in 2012, demand is rising. The top seller was Volkswagen (here I am referring to VW and Audi combined; if we say only VW, the right percentage is 72%), with 78% of the market. VW is very bullish on diesel – and happens to have its American headquarters in northern Virginia.

In sum, the proposal lacks a broad framework on how to improve Virginia’s overall transportation system. Yes, it provides a consistent funding source, but it will also encourage more driving and more oil consumption. It would truly be bold to be honest with drivers that gas taxes are a sensible way to pay for roads, that $0.175 went a lot farther in 1986 than it does in 2012, and we need to pay for our infrastructure by raising taxes on old-fashioned, gas-powered vehicles.